WASHINGTON, DC - The Sacagawea $1 coin was introduced, ahead of schedule, on January 30, 2000. Supported by a broad spectrum of retail organizations and backed by an unprecedented marketing program aimed at consumers and businesses, the "golden dollar" has received much favorable publicity, and more than a billion of the coins have been minted. The National Automatic Merchandising Association has enlisted the aid of its members in publicizing the Sacagawea dollar, making it available to vending patrons, and encouraging vending company personnel to use it for their routine daily transactions.
The American public appears to like the coin, and people comment positively when they receive one in payment or as change. "Golden dollars" are in use by the U.S. Postal Service, a growing number of transit operating authorities and municipal governments, and many vending operations. Despite all of this, the coin continues to be regarded generally as a curiosity, seldom seen in daily commerce.
VENDING TIMES spoke with James C. Benfield, executive director of the Coin Coalition, about the Sacagawea dollar's progress as its first anniversary approaches. The Coin Coalition coordinated the 12-year campaign for Congressional authorization of a dollar coin to replace the ill-fated Susan B. Anthony dollar of 1979. Benfield, a partner with Bracy Williams & Co. (Washington, DC) has led the Coalition since 1987.
"It is the best of coins; it is the worst of coins," Benfield said. "The naysayers have fair claim to declare the coin 'another Susan B. Anthony.' Like most Americans, I have yet to receive a 'golden dollar' in change from a retail establishment."
The coin is not circulating, Benfield observed; and this is widely regarded as the result of consumers "hoarding" the coins when they do receive them. But that is not the problem, the Coin Coalition executive director emphasized.
"The hoarding of 'golden dollars' by the public has almost no bearing on its failure to circulate," he told V/T. "The public hoards almost a billion of each commemorative quarter, as they appear every ten weeks; but the quarter continues to circulate. Production of quarters was increased from about 1.6 billion annually in in the mid-1990s to over six billion in 2000."
The new quarters, honoring each state and issued in order of the states' entry into the Union, have been produced since 1999. The 11th in the series, commemorating New York's ratification of the Constitution, was issued early this month. They are popular collectibles, especially among younger Americans. They will be minted until 2008, and the traditional "eagle" design will not be manufactured again until the 50th in the series has been struck. But there is no shortage of quarters in retail cash drawers or vending machine coin boxes.
"The idea that the public 'accepts' or 'rejects' a particular denomination likewise has little bearing on the circulation of the 'golden dollar'," Benfield explained. "The key players in the circulation of any denomination are the store managers of chain restaurants, drugstores, grocery stores and convenience stores. All coins, and $1 and $5 bills, begin circulating in the economy from the cash drawers of these establishments. If the store manager doesn't stock $1 coins in the morning, then you won't get them as change in the afternoon."
Some vending operators have faulted the banks for lukewarm support of the new coin, but Benfield observes that banks can do little on their own account to promote circulation of the Sacagawea dollar. "Few folks get coins at the bank, except for rolls of quarters to feed parking meters or coin-operated laundry machines in apartment complexes," he pointed out.
BELLEVUE, WA , Coinstar, which operates self-service coin counting terminals in large retail stores and a growing number of financial institutions nationwide, conducts an annual consumer survey to determine Americans' opinions about the nation's money. The 2001 study, just completed, suggests that the public is not at all averse to new coin and bill denominations.
The third annual "Coinstar National Currency Poll" found 42 percent of respondents suggesting that the government introduce additional banknotes and coins. The most requested new bill denomination was $25, mentioned by 12 percent of respondents. The most desired new coin is a $5 piece, cited by 11 percent of those polled.
Although 60 percent of respondents said that they believe electronic payment methods eventually may replace paper currency, "Americans appear to be strongly attached to using traditional currency for purchases," Coinstar found., are overwhelming."
BANKS CAN'T DO IT ALONE
Banks also are susceptible to what Benfield calls "the chicken-and-egg problem." Some banks will not stock $1 coins unless there is a demand for them; but if they are not available, that demand is slow to develop.
In the absence of widespread $1 coin circulation, the coin-operated industries are dependent on their banks for supplies. An operator who has a difficult time getting dollar coins from his or her bank may be reluctant to create a local demand that will be hard to meet.
Benfield quotes a self-service carwash operator, Patty Landers of Squeaky Clean Car Wash (Beaumont, TX), on this dilemma. "We don't offer dollar coins to customers any more," she told him. "Until we can get the coins at our banks, we can accept them in our coin mechanisms, but not dispense them."
Dollar Coin Dimensions
While many people still believe that the old Susan B. Anthony and new Sacagawea dollar coins are the same size as quarters, the Coin Coalition's Jim Benfield continues to tell the media that this is a myth. "In fact, both coins are 43 percent larger than the quarter by weight or volume, while the quarter is only 12 percent larger than a nickel," he explains. "Color and edge are more important features than size, in distinguishing one coin from another."
This costly lesson was learned when the Anthony dollar, carefully sized to be a third larger in diameter and a third thicker than a quarter (the same dimensional ratios as the quarter to the nickel), was given a milled edge and a silver color, and regularly got confused with the quarter.
"The Anthony fiasco wasted taxpayer dollars," Benfield noted, but it did not represent a loss for the Treasury. "In fact, the government made over $800 million in profit on the Anthony dollar. It only cost 3.5 cents to manufacture, but was sold to the public for $1."
During the years 1979, 1980 and 1981, 857 million were manufactured. Increasing demand for a dollar coin during the preproduction phase of the Sacagawea piece caused the Mint to manufacture a final batch of Anthony dollars just over a year ago.
The coin's obvious advantages in many applications is causing it to catch on in an ever-widening series of niches, Benfield reported, and its use thus will continue to increase during 2001. Three major national supermarket chains and a leading national chain restaurant are likely to begin using the coin later this winter, he instanced.
And the New York City Transit Authority, largest mass-transit operator in the United States, will put more than 50 million $1 coins into circulation annually when its conversion to the $1 coin is completed later this year. New York City buses, unlike many of their suburban counterparts, are not equipped with fareboxes that can accept $1 bills. Riders use tokens, coins or magnetic-stripe "MetroCards" to pay the $1.50 fare, and thus will find the $1 coin option very attractive.
"Most transit systems, with Washington, DC's Metro being a notable exception, have been accepting and dispensing $1 coins for years," the Coin Coalition chief added. "However, a few Metro bus passengers are discovering that $1 coins are very convenient to use in bus fareboxes. The number of $1 coins showing up in fareboxes approaches 8,000 per month, quadruple the number of a year ago."
Many full-line vending operations have been dispensing dollar coins from their $5 changers for years, using Susan B. Anthony dollars until the new Sacagawea piece became available. Benfield reports that hundreds of vending locations (at least), from factory canteens to office breakrooms, now dispense the coins from $5 and $10 changers and accept them in their vending machines. Customers find them faster and easier to use than $1 bills, which can present validation problems when badly worn or defaced. And operators always have known that coins are quicker and less troublesome than banknotes to count and wrap for deposit.
The Coin Coalition executive director spoke with Jim Stansfield, owner of Stansfield Vending (LaCrosse, WI), who hailed the "golden dollar" as a great convenience. "Every week, our customers make 30,000 $1 coin purchases at vending machines, but we only need to replace 2,000 of those coins from our bank," Stansfield told him. "We are seeing a great reduction in the number of $1 bills that we have to process by hand."
Self-service carwash operations also are converting at a very high rate, Benfield continued, notwithstanding problems of the sort encountered by Ms. Landers in Texas. Mr. Sparkle Carwash, a 13-site chain in the Hartford, CT area, now runs exclusively on $1 coins.
And the appeal of the $1 coin in municipal parking-meter programs is obvious. Chicago, Philadelphia, Wilmington and Fort Worth are among major cities now modifying their parking meters to accept the new coins. As dollar coins replace quarters, Benfield explained, the operating authorities benefit from a 65 percent reduction in weight and 75 percent reduction in unit coin handling. And drivers benefit from increased time between visits to the meters.
These and other advantageous uses are giving more and more consumers a reason to seek out and carry dollar coins, Benfield summed up. However, all is not clear sailing for the Sacagawea coin, despite its widespread appeal.
"The chief stumbling-block to the success of the 'golden dollar' is the continued presence of the $1 bill," the Coin Coalition head emphasized. "The lesson demonstrated by our SBA experience, and learned by all countries that have introduced a high-denomination coin since 1979, is that the equivalent note must be removed from circulation. The only country not to learn that lesson is the United States.
"In the One Dollar Coin Act of 1997, Congress expressly forbade the Mint to make arguments that would tend to reduce or eliminate the $1 bill , such as pointing out that the government, according to the General Accounting Office, would save $522 million per year if the 'golden dollar' replaced the $1 Federal Reserve note," Benfield added. "Those opposing government waste, or favoring a tax cut, should take note."
The problem a coin encounters, when confronting an entrenched banknote of the same denomination, is competition for limited space in the cash register. "Like video rental stores that refused to stock separate libraries for VHS and Beta formats, retail stores simply don't have room in their cash drawers for the two forms of $1 denomination, nor the inclination to process both," the Coin Coalition chief pointed out. Long custom and familiarity gives the dollar bill the edge in this competition.
That could change. "When stores are willing to standardize in favor of the $1 coin, their results are surprising," Benfield reported. "Jim Opitz, a franchise owner of two Subway restaurants in Wisconsin, puts all $1 bills in the drop safe, and gives only $1 coins as change. 'My employees make fewer errors using $1 coins,' he said. 'My restaurants usually are off by $300 to $400 a year, but we're off by less than $10 this year. When working the till, I've noticed that $1 coins are faster, because they don't stick together like dollar bills. I would never go back to using $1 bills.'"
Other innovative retail managers agree. Jack Doyle, who helps manage 19 Burger King stores in southern Wisconsin, also has standardized the cash registers for dollar coins rather than dollar bills. He told Benfield, "Let's face it. Coins are easier and faster to use than paper. Speed is the name of our game." Vending operators certainly agree with this judgment.
"The 'golden dollar' will not go the way of the Susan B. Anthony $1 coin, because the underlying arguments for its existence are too powerful," Benfield concluded. "Its reliability and transaction speed over paper bills, and the weight reduction over four quarters for parking meters, newspaper racks and coin laundries, are overwhelming."